Now you and I can also be an independent power producer

Households as clean, sustainable electricity producers?

In the mid-1990s, there were only “big” boys in electricity generation such as YTL
Corp, Genting Sanyen and Malakoff. They were popularly known as Independent Power producers' or IPPs and were
looked upon with envy as it was alleged that they were making big bucks because of relatively high rates they
received from TNB.

Fast forward 15 years. Now you and I can also be an IPP (the term “clean and
sustainable electricity producer” is preferred) albeit a very much smaller one but with a difference.

Any owner of a link, semi-detached or bungalow house can now be, subject to
approval, a small clean and sustainable energy producer by generating green electricity (as opposed to
fossil-fuelled electricity by the big IPPs) and distribution licensee (such as TNB) is obliged to purchase it. What
all this means is that if you have a solar photovoltaic (PV) generator at home, you can apply to connect this
generator to the grid, and get paid for selling the electricity generated to TNB over the next 21 years.

Solar energy is clean, environmentally friendly and has zero emissions. There is
no depletion of natural resources and it is one of the fastest growing energy sources in the world.

And yes the rates are very attractive for generating electricity using solar
photovoltaic (PV) technology; it is about four times the normal domestic TNB electricity rates (at RM0.40 per kWh).
All you have to do is simply to apply and obtain a feed-in approval from the newly-established Sustainable Energy
Development Authority Malaysia (Seda Malaysia), sign a renewable energy power purchase agreement (REPPA) with TNB
and install the solar PV system on your rooftop.

On the average, the bungalow is able to produce about 1,000 kWh of electricity per
month (based on 10kW installed PV capacity). Given this, the owner may earn about RM1,200 per month (based on FiT
rate RM1.20 per kWh if the PV system is commissioned by 2012) and recoup his investment within eight to nine years.
The earnings may be even higher if the house owner meets other bonus criteria such as installing as a
building-integrated PV system. The current cost of 1 kW solar PV system ranges from RM12,000 to
RM14,000.

The interesting thing is that for your average household needs, you purchase the
electricity from TNB at between RM0.33 to 42.6 per kWh but when you produce the clean electricity, you can sell it
at between RM1.20 to RM1.70 per kWh depending on the installed capacity and the qualifying bonus criteria for solar
PV.

The longer the sun shines, the more one can “export” electricity to the national
grid during daylight hours (when power is urgently needed) and earn income. The downside and risk is that during
cloudy days, the income can be reduced significantly when the sun is not shining. If you apply now, you can lock in
these premium rates for the next 21 years!

Unlike the huge IPPs which use natural gas or coal as feedstock to generate
electricity, the household does not need to pay for any raw material or fuel because sunshine is free. For as long
as the sun is shining, the solar PV panels will generate electricity. Another advantage of solar power is that no
extra space is required because the panels can be installed on the rooftop. (Suddenly rooftops have income
potential. Many factory owners are now contemplating installing solar PV panels on their rooftop to earn extra
revenue while others are approaching factory owners to rent them their roofs.)

On Dec 1 2011, Seda Malaysia invited the public including households, small and
not-so-big IPPs (maximum size is 30 MW but only 5 MWp rated capacity for solar PV) to apply and book the amount of
green electricity they intended to produce to sell it to the distribution licensee. There are fixed quotas for each
of the four renewable energy sources namely biomass (including solid waste), biogas (including landfill), small
hydro and solar PV. There was overwhelming response to solar PV especially for the non-individuals.

The good news is that bookings are still open for individuals and households
intending to install solar PV systems as there is still available capacity for this category. As at Dec 7, Seda
reported that the total unfulfilled quota for solar PV is 6,650 kW; 1,650 kW to be commissioned by the first half
2013, 2500 kW each for second half of 2013 and first half of 2014.

Translating these figures into households, it would mean that about 665 bungalow
owners can avail themselves to the remaining capacity (assuming their average capacity is 10 kW). If all of the
remaining capacity is taken up by semi-detached owners, the number will increase to 1,330 assuming their installed
PV capacity is 5 kW. The figure for typical link houses, assuming an installed capacity of 3 kW, is 2,217
households.

The price guarantee for 21 years has been made possible by the Feed-in Tariff
(FiT) scheme implemented by Seda Malaysia. This scheme will be financed by the newly-established Renewable Energy
(RE) Fund, to which all electricity users (except for those domestic customers consuming less than 300 kWh per
month) will be required to contribute an additional 1% of their electricity bill.

House-owners who do not participate in solar PV electricity generation should not
begrudge the payment of the additional 1%. Instead they should view it as one of their contributions to a cleaner
and healthier environment. This is their social contribution for cleaner air. The public and community must also
share in undertaking this heavy responsibility with the Government.

Dr Pola Singh is a board member of the Sustainable Energy Development Authority
(Seda), Malaysia. The views expressed are his own. The public can apply for the feed-in approval via
efit.seda.gov.my and more information can be obtained from Seda's official portal atwww.seda.gov.my